Carry Trade vs. Deposit-Driven Euroization
Carry Trade vs. Deposit-Driven Euroization

Author: Ms.Nan Geng

Publisher: International Monetary Fund

Published: 2018-03-15

Total Pages: 29

ISBN-13: 1484348001

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Financial “euroization”—or “dollarization” outside of Central and Eastern Europe—is typically analyzed as a singular phenomenon that can be traced to a common set of factors. This paper argues that two types of euroization need to be distinguished, which have different causes, economic consequences, and policy implications: carry trade euroization that emerges when households and corporations seek to exploit interest rate differentials between foreign currency loans and local currency deposits, and deposit-driven euroization that is rooted in distrust in the local currency as a savings vehicle. We present a theoretical framework that sketches key features of both euroization types, and test it with data from 28 Emerging European and Central Asian economies.

30 Years of Transition in Europe
30 Years of Transition in Europe

Author: Robert Holzmann

Publisher: Edward Elgar Publishing

Published: 2020-11-27

Total Pages: 256

ISBN-13: 1839109505

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This thought-provoking book investigates the political and economic transformation that has taken place over the past three decades in Central, Eastern and Southeastern Europe (CESEE) since the fall of the Iron Curtain. Through an examination of both the successes and shortcomings of post communist reform and the challenges ahead for the region, it explores the topical issues of economic transition and integration, and highlights lessons to be learned.

Taking Stock of Monetary and Exchange Rate Regimes in Emerging Europe
Taking Stock of Monetary and Exchange Rate Regimes in Emerging Europe

Author: Nazim Belhocine

Publisher: International Monetary Fund

Published: 2016-11-29

Total Pages: 52

ISBN-13: 1475557892

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The demands on monetary and exchange rate regimes in CESEE have evolved, in line with the region’s development. In the 1990s, the immediate challenge was to rein in excessive inflation following transition, and to establish basic monetary order. These objectives have been achieved, owing largely to successful exchange rate–based stabilization. With this accomplished, the focus has shifted to cyclical monetary management, and to appropriately managing monetary conditions during CESEE’s growth and income convergence to the euro area. Flexible exchange rates—and the ensuing capacity of monetary conditions to adapt to the economies’ needs—are likely to remain advantages, especially to extent that CESEE’s GDP and income levels will resume convergence to the euro area. Once this process restarts, tighter monetary conditions will again be needed to limit goods and asset price inflation, and to contain growth imbalances.

Handbook on Critical Political Economy and Public Policy
Handbook on Critical Political Economy and Public Policy

Author: Christoph Scherrer

Publisher: Edward Elgar Publishing

Published: 2023-01-20

Total Pages: 520

ISBN-13: 1800373783

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This comprehensive and stimulating Handbook examines the contribution of political economy to public policy. It provides an overview of several strands of critical political economy, supported by case studies from OECD countries, Latin America, South Africa, and South and East Asia.

Integrated Policy Framework—Principles for the Use of Foreign Exchange Intervention
Integrated Policy Framework—Principles for the Use of Foreign Exchange Intervention

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2023-12-21

Total Pages: 61

ISBN-13:

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This note guides policy advice on the use of foreign exchange intervention (FXI) as part of the Integrated Policy Framework (IPF) in Fund surveillance. The note provides general principles for the advice in countries with flexible exchange rates and sets out three use cases for FXI that are tied to specific frictions. It explores the use of FXI as part of an overall policy response, allowing the advice to differ with shocks, frictions, and country-specific circumstances.

Building Resilient Banking Sectors in the Caucasus and Central Asia
Building Resilient Banking Sectors in the Caucasus and Central Asia

Author: International Monetary Fund. Middle East and Central Asia Dept.

Publisher: International Monetary Fund

Published: 2018-07-06

Total Pages: 49

ISBN-13: 1484366336

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External shocks since 2014—lower oil prices and slower growth in key trading partners—have put financial sectors, mainly banks, in the eight Caucasus and Central Asia (CCA) countries under increased stress. Even before the shocks, CCA banking sectors were not at full strength. Asset quality was generally weak, due in part to shortcomings in regulation, supervision, and governance. The economies were highly dollarized. Business practices were affected by lack of competition and, in most countries, connected lending, which undermined banking sector health. Shortcomings in financial regulation and supervision allowed the unsound banking practices to remain unaddressed. The external shocks exacerbated in these underlying vulnerabilities. Strains in CCA banking sectors intensified as liquidity tightened, asset quality deteriorated, and banks became undercapitalized. These challenges have required public intervention in some cases.

Building Resilient Banking Sectors in the Caucasus and Central Asia
Building Resilient Banking Sectors in the Caucasus and Central Asia

Author: MissMercedes Vera Martin

Publisher: International Monetary Fund

Published: 2018-07-06

Total Pages: 49

ISBN-13: 148436077X

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External shocks since 2014—lower oil prices and slower growth in key trading partners—have put financial sectors, mainly banks, in the eight Caucasus and Central Asia (CCA) countries under increased stress. Even before the shocks, CCA banking sectors were not at full strength. Asset quality was generally weak, due in part to shortcomings in regulation, supervision, and governance. The economies were highly dollarized. Business practices were affected by lack of competition and, in most countries, connected lending, which undermined banking sector health. Shortcomings in financial regulation and supervision allowed the unsound banking practices to remain unaddressed. The external shocks exacerbated in these underlying vulnerabilities. Strains in CCA banking sectors intensified as liquidity tightened, asset quality deteriorated, and banks became undercapitalized. These challenges have required public intervention in some cases.

Policy-Making at the European Periphery
Policy-Making at the European Periphery

Author: Zdravko Petak

Publisher: Springer

Published: 2018-05-30

Total Pages: 344

ISBN-13: 3319735829

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This book examines Croatia's economic and political transformation over the last 30 years. It brings together the best political scientists, macroeconomists and public finance experts from Croatia to provide an in-depth analysis of the Croatian policy-making context and the impact of Europeanization upon its domestic institutional framework. The second part of the book scrutinizes the political economy context and Croatia's long-term macroeconomic under-performance, especially in comparison to other transition economies. The final part explores sectoral public policies, including cohesion policy, education, health, pensions, and local government. The book offers a unique blend of Croatia's political economy framework and public policy analysis.

Foreign Currency Bank Funding and Global Factors
Foreign Currency Bank Funding and Global Factors

Author: Signe Krogstrup

Publisher: International Monetary Fund

Published: 2018-05-09

Total Pages: 64

ISBN-13: 1484353668

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The literature on the drivers of capital flows stresses the prominent role of global financial factors. Recent empirical work, however, highlights how this role varies across countries and time, and this heterogeneity is not well understood. We revisit this question by focusing on financial intermediaries’ funding flows in different currencies. A concise portfolio model shows that the sign and magnitude of the response of foreign currency funding flows to global risk factors depend on the financial intermediary’s pre-existing currency exposure. An analysis of a rich dataset of European banks’ aggregate balance sheets lends support to the model predictions, especially in countries outside the euro area.